6 key takeaways from Haiti’s economic decline since 2018

CAP-HAITIEN — A joint report published recently by the Haitian Institute of Statistics and Informatics (IHSI) and the Bank of the Republic of Haiti (BRH) has presented a bleak picture of Haiti’s economy. It has remained stagnant for six years, with no recorded growth since 2018. The middle class, which is meant to be the backbone of the economy, comprises only 8% of the country’s nearly 12 million people, the report indicates. 

Haiti’s last economic expansion was a modest 1.7% in 2018, but since then, the economy has contracted by 4.2% due to several factors, including political instability, social unrest, and the COVID-19 pandemic. As poverty deepens—more than 60% of Haitians live on less than $1 a day—and insecurity stifles investment, the government has unveiled an ambitious $324 billion gourdes or about $2.5 billion budget for 2024 aimed at addressing these challenges. However, experts warn that recovery will require bold reforms and significant international support.

Minister of Economy and Finance Alfred Fils Métellus, who intervened on Télé Métropole’s Kesner Pharel Grand Rendez-Vous Économique show on Jan. 1, outlined the causes and consequences while proposing solutions to reverse the trend.

The following are six takeaways from the report, along with action plans proposed by the transitional government:

Poverty levels continue to rise

More than 60% of Haitians live on less than $1 a day, while over 30% are in extreme poverty. Minister Alfred Fils Métellus stressed the critical role of the middle class – a group that makes up only 8% of the population – in stabilizing the economy. He noted that building a stronger middle class will be essential for Haiti’s long-term recovery.

Agricultural sector in decline

The agricultural sector, which once served as the pillar of the Haitian economy, is now contracting at an annual rate of 5%. This has exacerbated food insecurity across the country, leaving millions vulnerable. Minister Métellus emphasized the urgent need for targeted investment in agriculture to reverse this trend.

Insecurity and its economic toll

Insecurity is one of the most significant barriers to economic recovery. Minister Métellus revealed that repairing the damage caused by insecurity will require $1.3 billion, a figure to be included in the national budget. The lack of security has stifled investment, disrupted businesses, and displaced communities, further deepening Haiti’s economic challenges.

Budget priorities for recovery

Haiti’s 2024 budget of 324 billion gourdes, or about $2.5 billion, prioritizes three critical areas:

• Restoring security to ensure stability.
• Organizing credible elections by February 2026.
• Addressing the humanitarian crisis by subsidizing small businesses (SMEs) and creating jobs.

Decentralization

Métellus also plans to decentralize spending to reduce the dominance of the West Department, which absorbs 60-70% of national resources.

The role of international donors and the private sector

To finance recovery efforts, Haiti will depend heavily on international donors and the private sector. A chart presented during Métellus’ interview with Kesner Pharel revealed a $900 million funding gap that the government hopes to close through international aid. Métellus emphasized the importance of mobilizing these funds while pursuing reforms to rebuild confidence in Haiti’s economy.

For many observers, the transitional government plan looks ambitious. However, with a shrinking middle class, rising poverty, and a reliance on international donors, the path to recovery remains fraught with challenges.

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